TechFaith Reports Fourth Quarter and Full Year 2013 Financial Results

    TechFaith Reports Fourth Quarter and Full Year 2013 Financial Results

PR Newswire

BEIJING, March 12, 2014

BEIJING, March 12, 2014 /PRNewswire/ -- China TechFaith Wireless Communication
Technology Limited (NASDAQ: CNTF) ("TechFaith" or the "Company") today
announced its unaudited financial results for the fourth quarter and the full
year ended December 31, 2013.

For the fourth quarter of 2013, TechFaith reported total net revenues of
US$31.2 million compared to US$29.9 million in the third quarter of 2013.
Gross profit for the fourth quarter of 2013 was US$4.0 million compared to
US$4.9 million in the third quarter of 2013. Gross margin for the fourth
quarter was 12.9% compared to 16.3% in the previous quarter, primarily
reflecting business mix. Operating expenses for the fourth quarter of 2013
increased to US$8.8 million compared to US$4.7 million for the third quarter
of 2013, primarily due to the impairment of long-lived assets in the amount of
US$3.1 million and the impairment of goodwill in the amount of US$1.2 million
in the fourth quarter of 2013. Net loss attributed to TechFaith for the fourth
quarter of 2013 was US$2.1 million or US$0.0390 per basic and diluted weighted
average outstanding ADS compared to net income of US$0.3 million or US$0.0049
per basic and diluted weighted average outstanding ADS in the third quarter of
2013.

For the full year ended December 31, 2013, TechFaith reported total net
revenues of US$119.5 million compared to US$137.7 million for the full year
ended December 31, 2012, primarily due to declines in revenues from the
Company's gaming business and its branded phone business. Gross profit for the
full year 2013 was US$16.8 million, compared to US$31.3 million for the full
year 2012. Gross margin for the full year 2013 was 14.1%, compared to 22.7%
for the full year 2012. Operating expenses for the full year 2013 was US$22.0
million compared to US$31.1 million for the full year 2012. Net loss
attributed to TechFaith for full year 2013 was US$2.5 million or US$0.0467 per
basic and diluted weighted average outstanding ADS, compared to a net loss of
US$3.3 million or US$0.0622 per basic and diluted weighted average outstanding
ADS for the full year 2012.

Miss Ouyang Yuping, TechFaith's Chief Financial Officer, said, "2013 was
another very challenging year. Our business continued to be negatively
impacted by competition in the mobile phone markets we serve, and continually
changing customer demands in the gaming business. Given this difficult
environment, we focused on strict operating controls to help us weather the
market volatility, reducing operating expenses by 29.2% for the full year 2013
compared to the full year 2012. Importantly, we exited 2013 with a balance of
cash and cash equivalents of US$265.6 million. Our balance sheet continues to
give us the ability to pursue the long-term business initiatives and
strategies that are central to our Company's success, including the ongoing
development of our real estate portfolio, even with higher levels of
competition and the continuing market volatility in mobile and gaming
businesses."

Mr. Deyou Dong, President and Chief Operating Officer of TechFaith, said,
"While the market environment remains very challenging and difficult to
forecast, our focus is on working with existing customers to develop potential
opportunities in both China and in the markets we serve worldwide. We do not
expect to see the business conditions materially improve over the near-term.
That said, we are seeing some positive movement in our mobile phone business,
which depending on the timing of customers' orders could potentially become
revenue generating for TechFaith later this year. The opportunities we are
focused on are those where TechFaith has competitive advantages: lower volume,
higher feature value content, and tailored design offerings. This encompasses
our popular ruggedized lines, as well those catering to the certain sports and
healthcare needs. We will continue to develop and launch more ruggedized and
tailored models to satisfy the demands of both domestic and international
clients, as well as enterprise solutions targeting specific industries."

Mr. Defu Dong, Chairman and Chief Executive Officer of TechFaith, said, "We
continued to focus on our core areas of offering high level ruggedized mobile
phones throughout 2013. In addition, we have also expanded into different
ruggedized products categories such as 'Extreme Digital Camera,' 'Extreme
Smart Watches' and 'Ultimate Smart Headphones'. This has allowed us to support
customers with complex and unique needs that larger handset companies were not
suited to provide. We have taken an even more cautious approach over the past
year to ensure our long-term success. Our focus remains on creating long-term
value for both TechFaith and our shareholders. In-line with this view, we have
maintained a strong balance sheet and not pursued dilutive acquisitions that
would only serve as costly distractions. Instead, we made further progress on
the development of our High-Tech Park campus. In Hangzhou, two buildings have
been completed. In Beijing 16 buildings are on track to be completed by the
fourth quarter of 2014. Overall, we expect that the above positive catalysts
in our business will ultimately lead to the creation of value for both
TechFaith and our shareholders."

First Quarter of 2014 Outlook

TechFaith currently expects its total revenues for the first quarter of 2014
to be in the range of US$28.0 million to US$30.0 million. The forecast
represents TechFaith's current and preliminary view, which is subject to
change.

Investor Conference Call / Webcast Details

TechFaith will hold a conference call on Wednesday, March 12, 2014 at 8:00
a.m. U.S. Eastern Time (8:00 p.m. Wednesday, March 12, 2014 in Beijing) using
dial-in +1-617-213-8061 or +1-866-825-3209. The conference call passcode is
27625464. A live webcast of the conference call will also be available on
TechFaith's website at www.techfaithwireless.com.

A replay of the call will be available approximately 2 hours after the
conclusion of the live call by telephone at +1-617-801-6888, with passcode
49110768. A webcast replay will also be available at
www.techfaithwireless.com.

About TechFaith

TechFaith (NASDAQ: CNTF) has three primary businesses. The Company is a
leading global mobile solutions provider for the global mobile handsets market
(previously called the ODP (Original Developed Product) business). The Company
is a leading developer of specialized mobile phones for differentiated market
segments, including the rapidly growing smartphone market targeting wireless
mobile phone network operators and end users; the Company also serves sports
enthusiasts with a tailored line under the Jungle brand and the teen market
under licensed brands. Under the Company's MobiFox brand (previously "17VEE"
and "17FOX"), the Company has built a leading intellectual property based
motion gaming business ranging from Bluetooth-enabled motion gaming
controllers and software to a planned proprietary set-top motion game box. For
more information, please visit www.techfaithwireless.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates," "confident," "outlook" and
similar statements. Among other things, the outlook for the first quarter
2014, the business outlook and strategic and operational plans of TechFaith
and management quotations contain forward-looking statements. TechFaith may
also make written or oral forward-looking statements in its periodic reports
to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in
its annual report to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or employees
to third parties. Statements that are not historical facts, including
statements about TechFaith's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual results to
differ materially from those contained in any forward-looking statement.
Potential risks and uncertainties include, but are not limited to, those risks
outlined in TechFaith's filings with the U.S. Securities and Exchange
Commission, including its annual report on Form 20-F. TechFaith does not
undertake any obligation to update any forward-looking statement, except as
required under applicable law.



CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of U.S. Dollars, except share and per share/ADS data and unless otherwise stated)
                                   ThreeMonthsEnded  Three Months Ended       Twelve Months Ended
                                   September 30,       December 31,             December 31,
                                   2013                2013        2012         2013        2012
Revenues:
ODP                                $21,321             $23,680     $12,077      $79,661     $57,803

                                   8,096               5,414       11,617       32,203      50,266
Brand name phone sales
Game                               486                 2,112       7,338        7,643       29,594
Total net revenues                 $29,903             $31,206     $31,032      $119,507    $137,663
Cost of revenues:
ODP                                $18,280             $20,493     $10,577      $70,989     $53,971

                                   6,384               4,698       8,940        25,374      34,250
Brand name phone sales
Game                               373                 1,992       5,577        6,307       18,146
Total cost of revenues             $25,037             $27,183     $25,094      $102,670    $106,367
Gross Profit                       $4,866              $4,023      $5,938       $16,837     $31,296
Operating expenses:
General and administrative         $1,193              $1,660      $1,957       $6,322      $5,594
Research and development           2,334               2,222       2,010        8,285       9,343
Selling and marketing              684                 547         801          2,535       12,328
Impairment of long-lived assets    515                 3,110       3,131        3,625       3,833
Impairment of goodwill             -                   1,242       -            1,242       -
Total operating expenses           $4,726              $8,781      $7,899       $22,009     $31,098
Government subsidy income          84                  84          44           357         232
Other operating income             580                 960         475          2,121       1,124
Income (loss) from operations      $804                $(3,714)    $(1,442)     $(2,694)    $1,554
Interest expenses                  (36)                (78)        -            (115)       -
Interest income                    456                 462         428          1,888       2,032
Other income                       13                  229         663          246         354
Change in fair value of put option (60)                (30)        (60)         (150)       (150)
Income(loss) before income taxes   $1,177              $(3,131)    $(411)       $(825)      $3,790
Income tax (expenses) benefits     (1,106)             891         (2,147)      (2,146)     (5,635)
Net income (loss)                  $71                 $(2,240)    $(2,558)     $(2,971)    $(1,845)
Less: net (loss) income
attributabletothenoncontrolling (187)               (176)       485          (501)       1,449
interest
Net income (loss) attributable to  $258                $(2,064)    $(3,043)     $(2,470)    $(3,294)
TechFaith
Net income (loss) attributable to
TechFaith per share
 Basic                            $0.00               $(0.00)     $(0.00)      $(0.00)     $(0.00)
 Diluted                          $0.00               $(0.00)     $(0.00)      $(0.00)     $(0.00)
Net income (loss) attribute to
TechFaith per ADS
 Basic                            $0.00               $(0.04)     $(0.06)      $(0.05)     $(0.06)
 Diluted                          $0.00               $(0.04)     $(0.06)      $(0.05)     $(0.06)
Net income (loss)                  $71                 $(2,240)    $(2,558)     $(2,971)    $(1,845)
Other comprehensive income, net of
tax
Foreign currency translation       978                 3,908       2,894        9,892       3,525
adjustment
Comprehensive income               1,049               1,668       336          6,921       1,680
Less: Comprehensive (loss) income
attributable to noncontrolling     (72)                192         706          372         1,749
interest
Comprehensive income (loss)        $1,121              $1,476      $(370)       $6,549      $(69)
attributable to TechFaith
Weighted average shares
outstanding
 Basic                            794,003,193         794,003,193 794,003,193  794,003,193 794,003,193
 Diluted                          794,003,193         794,003,193 794,003,193  794,003,193 794,003,193



CHINA TECHFAITH WIRELESS COMMUNICATION TECHNOLOGY LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of U.S. Dollars)
                                    December31,  September30,  December31,
                                    2013          2013           2012
Assets
Current assets:
Cash and cash equivalents           $265,649      $267,024       $257,950
Accounts receivable, net of
allowances of $543, $7,607 and
$7,796 as of December 31, 2013,     17,100        25,156         8,666
September 30, 2013 and December 31,
2012, respectively
Notes receivable                    58            33             -
Inventories, net                    13,576        7,681          7,490
Prepaid expenses and other current  10,436        8,394          15,678
assets
Total current assets                $306,819      $308,288       $289,784
Property, plant and equipment, net  $94,282       $88,249        $80,614
Land use rights, net                10,729        10,669         10,645
Acquired intangible assets, net     2,798         4,863          4,061
Goodwill                            -             1,242          1,242
Total assets                        $414,628      $413,311       $386,346
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable (including
accounts payable of the
consolidated variable interest
entity without recourse to China
Techfaith Wireless Communication    14,247        19,795         11,140
Technology Limited, $nil, $nil and
$nil as of December 31, 2013,
September 30, 2013 and December 31,
2012, respectively)
Short-term loan (including
short-term loan of the consolidated
variable interest entity without
recourse to China Techfaith
Wireless Communication Technology   15,350        15,350         15,350
Limited, $nil, $nil and $nil as of
December 31, 2013, September 30,
2013 and December 31, 2012,
respectively)
Accrued expenses and other current
liabilities(including accrued
expenses and other current
liabilities of the consolidated
variable interest entity without
recourse to China Techfaith         21,302        16,207         11,784
Wireless Communication Technology
Limited, $189, $187 and $184 as of
December 31, 2013, September 30,
2013 and December 31, 2012,
respectively)
Advance from customers(including
advance from customers of the
consolidated variable interest
entity without recourse to China
Techfaith Wireless Communication    9,525         9,602          9,173
Technology Limited, $nil, $nil and
$nil as of December 31, 2013,
September 30, 2013 and December 31,
2012, respectively)
Deferred revenue(including deferred
revenue of the consolidated
variable interest entity without
recourse to China Techfaith
Wireless Communication Technology   3,854         2,756          4,178
Limited, $nil, $nil and $nil as of
December 31, 2013, September 30,
2013 and December 31, 2012,
respectively)
Income tax payable (including
income tax payable of consolidated
variable interest entity without
recourse to China Techfaith
Wireless Communication Technology   254           1,606          1,062
Limited, $22, $22 and $21 as of
December 31, 2013, September 30,
2013 and December 31, 2012,
respectively)
Put option liability (including
income tax payable of consolidated
variable interest entity without
recourse to China Techfaith
Wireless Communication Technology   1,830         1,800          1,680
Limited, $nil, $nil and $nil as of
December 31, 2013, September 30,
2013 and December 31, 2012,
respectively)
Total current liabilities           $66,362       $67,116        $54,367
Long-term loan (including income
tax payable of consolidated
variable interest entity without
recourse to China Techfaith
Wireless Communication Technology   290           290            290
Limited, $nil, $nil and $nil as of
December 31, 2013, September 30,
2013 and December 31, 2012,
respectively)
Total liabilities                   $66,652       $67,406        $54,657
Shareholders' equity
Ordinary shares of par value
$0.00002:
(50,000,000,000,000 shares
authorized; shares issued and
outstanding, 794,003,193,           $16           $16            $16
794,003,193 and 794,003,193, as of
December 31, 2013, September 30,
2013 and December 31, 2012,
respectively)
Additional paid-in capital          144,083       143,680        142,837
Accumulated other comprehensive     55,841        52,301         46,822
income
Statutory reserve                   23,730        23,137         23,137
Retained earnings                   90,409        93,066         93,472
Total Techfaith shareholders'       $314,079      $312,200       $306,284
equity
Noncontrolling interest             $33,897       $33,705        $25,405
Total shareholders' equity          $347,976      $345,905       $331,689
Total liabilities and shareholders' $414,628      $413,311       $386,346
equity



SOURCE China TechFaith Wireless Technology Limited

Website: http://www.techfaithwireless.com
Contact: China Techfaith Wireless Communication Technology Limited, Jay Ji,
+86-10-5822-8390, ir@techfaith.cn or Global IR Partners, David Pasquale,
+1-914-337-8801, cntf@globalirpartners.com
 
Press spacebar to pause and continue. Press esc to stop.